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France's Hollande optimistic over 2014 growth

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(Globalpost/GlobalPost)

PARIS (Reuters) - President Francois Hollande indicated he was more optimistic over France's economic outlook next year, though he stopped short of committing his government to a new target.

Hollande told the daily Le Monde that a series of reforms conducted since he took office 15 months ago were producing positive effects on the economy and would keep building momentum.

The government's 2014 growth forecast is currently 1.2 percent, but Les Echos newspaper has reported that it has been working with an unpublished estimate around 0.8 percent as it drafts its budget for next year.

"I wager that we will be able to raise the 2014 growth forecast slightly," Hollande said in an interview with Le Monde.

A presidential aide told Reuters that Hollande had based his remark on the 0.8 percent estimate as suggested by Les Echos.

The Bank of France earlier this month doused hopes of a quick economic rebound when it published a forecast for growth of just 0.1 percent in the third quarter, citing weak domestic demand as a slowing factor.

Second-quarter growth was a relatively robust 0.5 percent, though economists have raised doubts about whether that pace can be kept up because much of that growth was based on one-off factors like energy production in cold weather and firms rebuilding inventories.

Hollande is fighting to kickstart growth through tax credits for companies while battling to bring down record joblessness, but his efforts are being complicated by EU-imposed belt-tightening aimed at shrinking the public deficit.

The Socialist president said he recognized growing frustration among business leaders with plans to hike corporate taxes in the 2014 budget, saying it was time to ease off hikes.

"Thanks to the major savings achieved, the time has come for a pause (in tax rises) - earlier than we had foreseen," he said.

Finance Minister Pierre Moscovici sought on Thursday to address anger over high taxes, telling business leaders the increases to be unveiled in an amended 2014 budget next month would be less severe than expected.

The government this week outlined the terms of an overhaul of its pension system that will gradually extend the pay-in period to 43 years by 2035 while also nudging up pension contributions paid by workers and employers.

But that reform, like an overhaul of rigid labor rules earlier this year, has been criticized by some economists as being too cautious and failing to fix longstanding structural problems.

"Never before, in the space of 15 months, has France undertaken as many structural reforms," said Hollande. "These are big steps, judging from the distance covered."

(Reporting by Nicholas Vinocur; Additional reporting by Jean-Baptiste Vey; Editing by Jeremy Gaunt)

http://www.globalpost.com/dispatch/news/thomson-reuters/130830/frances-hollande-optimistic-over-2014-growth